ARM share price tumbles as Apple figures fail to impress

on Jul 22, 2015
Updated: Oct 21, 2019
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British chip designer ARM Holdings Plc (LON:ARM) has seen a jump in second-quarter profit on the back of robust royalty revenue, but its overall revenue for the period came in below estimates, which contributed to a significant fall in its share price in today’s trading. The company today posted its financial report for the three months ended 30 June, which showed that second-quarter pre-tax profit increased 32 percent year-on-year to £123.9 million. Q2 revenue was up 22 percent at £228.5 million, with royalties- an important measure for ARM’s financial performance – soaring 41 percent to £113.5 million. However, the total revenue figure came in short of the £234.9-million average forecast of analysts polled by Bloomberg.

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ARM’s share price also took a hit from a disappointing report by Apple Inc yesterday. The US tech giant did not meet forecast revenue levels, which added to concerns that the smartphone market is weakening. Apple is one of ARM’s biggest customers, accounting for 20-25 percent of processor royalties last year, according to analyst estimates.
The company’s chief executive officer, Simon Segars, described Q2 as“a strong quarter for ARM” with “a highly diverse range of leading companies choosing to license ARM’s latest processors and physical IP for their future product developments.” He added: “ARM has been investing in advanced technology products for mobile devices, automotive applications and enterprise infrastructure, and in Q2 ARM signed licences for many of these new products.”

ARM also said in its report that it had increased its interim dividend by 25 percent to 3.15 pence.
In today’s trading, ARM shares were down 5.5 percent at 982.00p, as of 13:30 BST. The stock has fallen 1.5 percent since the start of the year and the company’s market capitalisation currently stands at 13.8 billion.
The 21 analysts offering 12 month price targets for ARM have a median target of 1,250p, with a high estimate of 1,550p and a low estimate of 700.00p.
As of 15:44 BST, Wednesday, 22 July, ARM Holdings plc share price is 967.25p.

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